US-based Jane Street Caught In Rs 4843 cr Illegal Gain Through Manipulative Derivative Trading

Mumbai: Securities and Exchange Board of India has banned four entities of US based Jane Street Group(J S Group), an investment firm, from Indian Securities market for fraudulent and manipulative trading in index options in equity derivatives segment and making illegal gains of over Rs 4,843.57 crore during the period August 31, 2023 to May 22, 2025.

"At least on 21 days, the J S Group has prima facie engaged in illegal manipulation of the securities that comprise the BANK NIFTY and NIFTY indices, there by vitiating market fairness and integrity, and illegally benefiting from their trading activities and positions in the index options markets," Ananth Narayan G.,whole time member, Sebi said in a 105 page detailed interim order dated July 3, 2025.

"The prima facie finding is that BANK NIFTY index-a major index of the securities market comprising 12 stocks of India’s major banks has prima facie been manipulated in a complex and illegal manner aided by the JS Group’s immense trading,financial and technological prowess. Thus there has been an egregious distortion of integrity and fairness in the securities market.Past instances of securities market violations have mostly involved individual stocks or segments. However,this is an unusual case where prima facie, multiple liquid stocks with high retail participation have together been manipulated to facilitate the manipulation of the index options market,resulting in massive profits for the manipulators,at the cost of other participants and retail traders," the order said.

"The total amount of unlawful gains earned by the J S Group from the alleged violations shall be impounded, jointly and severally. Entities are directed to open escrow account in a Scheduled Commercial Bank in India to deposit jointly and severally the aforesaid amount of unlawful gains with a lien marked in favour of Sebi and the amount kept therein shall not be released without permission from Sebi," the interim order said.

Sebi also directed banks, custodians and depositories to freeze their accounts to the extent of the illegal gains from debits and directed J S Group to wind up all existing open positions in the market.

Sebi further directed exchanges to monitor any future dealings and positions of JS Group closely on an ongoing basis, to ensure that they do not, either directly or indirectly, indulge in any kind of manipulative activity.

The illegal gains by the J S Group entities from trades executed in index options segment from August 31, 2023 to May 22, 2025 has been calculated by Sebi as over Rs 4,843.57 crore and the market regulator found no reason to set off losses worth Rs 199.7 crore from trades that enabled JS Group to benefit immensely and illegally from the even larger positions that they were creating or carrying in index options, Sebi order said.

JS Group created conditions that misled BANK NIFTY index option participants with artificially inflated call option premiums and subdued put option premiums, allowing JS Group to enter into these options trades at very favourable pricing, the order said.

Shares of platforms exposed to foreign trading activity saw sharp declines amid fears of potential business impact following the regulatory crackdown - BSE(-6.42 per cent),CDSL(-2.30 per cent), Nuvama Wealth(-11.26 per cent), Angel One(-5.94 per cent).

"The action comes as global players like Citadel, IMC Trading, and Millennium show increasing interest in India’s rapidly expanding derivatives market,"said a broker.

Jane Street Group LLC is a global proprietary trading firm in the financial services industry. Jane Street employs more than 2,600 people in five offices across the United States, Europe, and Asia and trades in 45 countries, as per Sebi order.